Performance Based Incentive Compensation Clause Samples
A Performance-based Incentive Compensation clause establishes a system where an employee or contractor's compensation is tied to the achievement of specific performance targets or goals. Typically, this clause outlines the metrics or benchmarks that must be met, such as sales quotas, project milestones, or quality standards, and details the corresponding bonuses or additional payments awarded upon successful attainment. Its core practical function is to motivate individuals to excel by directly linking their financial rewards to measurable results, thereby aligning their efforts with the organization's objectives and driving higher performance.
Performance Based Incentive Compensation. Corporation may provide Employee with incentive compensation in the form of cash and/or stock bonuses during the term of this Agreement. The amount of such bonuses shall be determined by the Board or a Compensation Committee thereof taking into consideration the growth and profitability of Corporation, the relative contribution by Employee to the business of Corporation, the economy in general, and such other factors as the Board or Compensation Committee deems relevant. All of these factors shall be set forth in a bonus plan prepared by the Board with specifics as to the Employee attached as an addendum to this Agreement.
Performance Based Incentive Compensation. 5.1 In addition to the Base Salary, the Executive shall be entitled to receive, for each year January 1, 2012 through December 31, 2014 (the “Measurement Period”), performance-based profit incentive compensation (the “Profit Bonus”) consisting of the following:
5.1.1 $2,000 for each $0.01 that the Corporation’s adjusted earnings per diluted share (as defined herein, “Adjusted EPS”) for each year during the Measurement Period exceeds the Corporation’s Adjusted EPS for the prior year; plus
5.1.2 $2,000 for each $0.01 that the Corporation’s Adjusted EPS for each year during the Measurement Period exceeds $1.53; plus
5.1.3 $5,000, plus or minus, for each 1% that the increase or decrease in Corporation’s Adjusted EPS for each year during the Measurement Period is above or below 1.75 times the Index of Number of Industry Units Sold (as defined herein); provided, however, that the amount added or subtracted will not exceed 0.3% of Corporation’s pre-tax income for the subject year; plus
5.1.4 One (1%) percent of the entitlement, special refund, reduction to, or credit against, any income or property tax otherwise due to Federal, state or local taxing authorities (each or, collectively, “Savings”) obtained as a result of initiative taken by or under the direction of the Executive and granted by the taxing authority during any year of the Measurement Period, which Savings are reasonably likely to be realized by the Affiliated Companies within five (5) years of the date granted; plus
5.1.5 Five (5%) percent of any Savings granted since January 1, 2009 which is utilized by the Affiliated Companies during any year of the Measurement Period.
5.2 Upon expiration of the Measurement Period, the Executive shall be entitled to receive 300 Deferred Stock Units, representing shares of Common Stock of the Corporation (“DSUs”), for each 0.1% that the Corporation’s average annual return on invested capital (as defined herein, “ROIC”) for the Measurement Period is above 18%; provided, however, that the total number of such DSUs will not exceed 15,000 units (the “ROIC Bonus”).
5.3 For purposes of this Agreement:
5.3.1 The term “Adjusted EPS” means the earnings per diluted share as reported by the Corporation in its consolidated financial statements, adjusted to exclude the after-tax impact of any judgment award or settlement amount paid to terminate litigation pending as of the date hereof involving products manufactured by the Kinro Composites division of Kinro.
Performance Based Incentive Compensation. 5.1 In addition to the Base Salary, and subject to Sections 5.6 and 5.7 hereof, the Executive shall be entitled to receive, for each year during the Term, commencing with the year ending December 31, 2009, performance-based profit incentive compensation (the “Profit Bonus”) as follows:
5.1.1 An amount equal to three and three-quarters (3.75%) percent of the Operating Profits (as defined herein) of the LCI Entities and the Operating Profits of the Kinro Entities combined (the “Combined Profits”) in excess of $35,000,000 and up to $50,000,000; plus
5.1.2 An amount equal to four and one-quarter (4.25%) percent of the Combined Profits in excess of $50,000,000 and up to $65,000,000; plus
5.1.3 An amount equal to five (5%) percent of the Combined Profits in excess of $65,000,000; plus
5.2 Performance-based industry-comparable incentive compensation (the “Industry Bonus”) consisting of the following: There will be added to, or subtracted from, the Profit Bonus the amount of $20,000 for each one (1%) percent that the percentage increase or decrease in the Combined Profits for any year during the Term, as compared to the immediately preceding calendar year, exceeds or is less than two and one-half times (2.5x) the Index of Number of Industry Units Sold (as defined herein) during such year; provided, however, that (i) for purposes of calculating the Industry Bonus, the Combined Profits shall be determined without giving effect to any charge for impairment of goodwill or other intangibles or the 2008 executive retirement charge, and (ii) the Industry Bonus for any year during the Term shall not exceed one and one-half (1.5%) percent of the Combined Profits.
5.3 With respect to the Profit Bonus and the Industry Bonus, if any, of the LCI Entities or the Kinro Entities shall acquire additional business operations, or dispose of existing business operations, the performance goals pursuant to which the Profit Bonus and the Industry Bonus are paid will be modified, consistent with the Corporation’s past practices, to give effect to such acquisition or disposition; plus
5.4 Subject to Section 5.6 hereof, performance-based return on assets (“ROA”) incentive compensation (the “ROA Bonus”) consisting of the following: For each year during the Term that the LCI Entities and the Kinro Entities achieve the combined Return on Assets (as defined herein) indicated, the Executive will receive the following amounts:
5.4.1 For 2009, if the ROA is at least 20%, the Executive will receiv...
Performance Based Incentive Compensation. 5.1 In addition to the Base Salary and Incentive DSUs Bonus, the Executive shall be entitled to receive, for each year January 1, 2012 through December 31, 2014 (the “Measurement Period”), performance-based profit incentive compensation (the “Profit Bonus”) consisting of the following:
5.1.1 $4,000 for each $0.01 that the Corporation’s adjusted earnings per diluted share (as defined herein, “Adjusted EPS”) for each year during the Measurement Period exceeds the Corporation’s Adjusted EPS for the prior year; plus
5.1.2 $4,000 for each $0.01 that the Corporation’s Adjusted EPS for each year during the Measurement Period exceeds $1.53; plus
5.1.3 $10,000, plus or minus, for each 1% that the increase or decrease in Corporation’s Adjusted EPS for each year during the Measurement Period is above or below 1.75 times the Index of Number of Industry Units Sold (as defined herein); provided, however, that the amount added or subtracted will not exceed 0.6% of Corporation’s pre-tax income for the subject year.
5.2 Upon expiration of the Measurement Period, the Executive shall be entitled to receive 750 DSUs for each 0.1% that the Corporation’s average annual return on invested capital (as defined herein, “ROIC”) for the Measurement Period is above 18%; provided, however, that the total number of DSUs will not exceed 50,000 units (the “ROIC Bonus”).
5.3 For purposes of this Agreement:
5.3.1 The term “Adjusted EPS” means the earnings per diluted share as reported by the Corporation in its consolidated financial statements, adjusted to exclude the after-tax impact of any judgment award or settlement amount paid to terminate litigation pending as of the date hereof involving products manufactured by the Kinro Composites division of Kinro.
Performance Based Incentive Compensation